Fed Inspector Turned Whistleblower Reveals System Rigged For Goldman Sachs

Five years after we first reported on the “Goldman whistleblower” at the NY Fed, Carmen Segarra, the former bank examiner is out with a new book based on more than 46 hours of secret recordings. 

“Noncompliant: A Lone Whistleblower Exposes the Giants of Wall Street” is a 340-page exposé which vastly expands on the breadcrumbs Segarra has been dropping since word of her recordings first came to light, according to the New York Post.  

Segarra was a former bank examiner who looked into Goldman Sachs for the Federal Reserve Bank of New York, and claims she got fired in 2012 after making too much noise about Goldman’s alleged conflicts.

The New York Fed has often been blasted for its lackadaisical approach to overseeing banks leading up to the 2008 financial crisis. Its last president, William Dudley, was named in 2009 after spending 21 years at Goldman. But Segarra’s book claims that the problem persisted for years after the crisis, with regulators happy to act on the banks’ behalf.

“We want [Goldman] to feel pain, but not too much,” her boss — who goes by the pseudonym Connor O’Sullivan in the book — told her, Segarra claims. –New York Post

The recordings were made over a seven month period while Segarra worked at the New York Fed. Neither Goldman nor the NY Fed have disputed the authenticity of the tapes. 

Central to allegations of shady regulation was a 2012 deal in which energy giant Kinder Morgan would acquire rival El Paso Corp. for $21.1 billion - a deal which Goldman advised both sides of, while “its lead banker advising El Paso, Steve Daniel, owned $340,000 in Kinder Morgan stock” according to the Post. 

That didn’t matter to newly minted CEO David Solomon, who took over for Lloyd Blankfein last week. 

“A conflict is a perception, OK, of something that could affect the advice you’re giving, the judgment, et cetera,” said Solomon during a secretly recorded meeting with the New York Fed. “Our job … is to discuss those things and to work collectively with [clients] to decide whether or not those perceptions inhibit us.”